Consider the Short-Run Aggregate-Supply Curve in the Following Graph

question 112

Essay

Consider the short-run aggregate-supply curve in the following graph.
a.Calculate approximately the elasticities of the curve at two price levels,P = 20 and P = 100.(Hint: The price elasticity formula is EP = percentage change in Y / percentage change in P.)
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b.Explain the meaning of the elasticity in the context of the AS curve.
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c.Compare the two elasticities found in (a)and discuss the results.

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Definitions:

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